About Liquor Liability Insurance

Just before Christmas, 1933, Congress adopted the 21st amendment to The Constitution of the United States of America, which repealed the 18th amendment, thereby bringing an end to prohibition and federal control of alcohol. Since then, states have been largely responsible for control of alcoholic beverages through enactment of dram shop liability laws. The Dram Shop laws allow individuals to bring a civil suit against persons who serve, sell, or provide alcohol to one who is visibly intoxicated to the extent that they present a clear and obvious danger to themselves or others. They have been extended to allow the intoxicated person to sue for damages. Under the law, the individual has the right to sue for his own damages. The courts have also found that the Comparative Responsibility Act applies to dram shop laws. The act holds that the intoxicated person can recover damages only if the establishment is more responsible for the intoxication than they are.

How do people protect themselves when liquor is involved in their social event or a part of their business? There has always been a tremendous amount of confusion concerning liquor liability coverage and host liquor liability coverage and when these coverages are needed.

Host Liquor coverage: provides coverage for businesses or individuals against bodily injury or property damage suits brought by parties injured as a result of an intoxicated guest who was served alcohol at an event hosted by the insured. Host Liquor Liability coverage is included under most general liability policies for businesses not in the business of serving, manufacturing, distributing, selling, serving, or providing alcohol.

Liquor Legal Liability: provides coverage for bodily injury or property damage for which businesses or individuals become liable as a result of contributing to a person’s intoxication. Liquor Legal Liability provides coverage for those in the business of manufacturing, selling, distributing, or serving alcoholic beverages for a charge or no charge if a license is required for the activity. The general liability policy does not cover Liquor Legal Liability. Due to potential gaps between liquor liability and general liablitiy, it is prudent to have both policies. Liquor Liability provides coverage for the established owner who has someone become intoxicated on his premises and due to his drunken state causes and accident which results in serious damages to another person. The liquor liability policies should include coverage for assault and battery to protect the establishment owner.

It is important to remember, if you are hosting an event and making no specific charge for drinks you are most likely covered by Host Liquor Liability coverage. If your business involves the sale, manufacturing, distribution, and service of alcoholic beverages you need liquor liability coverage. Each state treats liquor liability exposures differently so, you must become familiar with the local laws concerning the exposure.